[PEN-L:185] Re: BLS Daily Report

[James Devine <jdevine@xxxxxxxxxxxxxxx>]

>The administration plans to unveil a new type of government savings bond
>today, with a return that will rise and fall with inflation to protect
>investors' gains as well as to help finance the Federal debt....  They
>will be promoted as an attractive means for middle-income people to
>prepare for retirement or a child's education....  In January 1997, the
>Treasury Department introduced its first inflation-indexed bonds, which
>were generally intended for large institutional investors....
>Investors' earnings from the new bonds will be determined by two rates.
>One rate, set by the Treasury Department, will remain the same for the
>life of the bond.  The second, a rate of inflation, will be determined
>every six months by BLS to reflect changes in a version of the CPI,
>according to the New York Times article....  (New York Times, page A19;
>Wall Street Journal, page C28).

doesn't this give the government an incentive to revise the CPI to downplay
inflation? Not that I think that incentives work so simply for the gov't,
it sure would be a temptation.

in pen-l solidarity,

Jim Devine jdevine@xxxxxxxxxxxxxxx &
http://clawww.lmu.edu/Departments/ECON/jdevine.html